When Income Grows, Who Gains?

From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. O Bottom 90% I Top 5-10% Top 1-5% I Top 1% 2 Indicates Decline Average income over time 1969 2008 $1400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200.000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percetile ath percetile 140000 8oth percentile 120000 5oth percentile 20th percetile 10th percentile 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 2 40% 25% 20% MiddleclassAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff /next 20% -- the "middle class" bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, measure of income inequ which has been reasing [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] I45-49 Is0-54 O 55-59 <25 O25.29 O 30.34 GINI Coefficient I40-44 D Ne Data Saurce: CIA- The orid factbook 2000 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 effective federal tax rate for top 1% of households, by income 36 33 A 32 31 29 28 year 1994 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviatioas from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 0.02 -0.03 -0.04 -0.05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 7.0% 6.0% 3.0% 2.0% Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Managemer Budget of the United States Fiscal Year 2011, Historical Table 2.1 and Mudget. © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%) Middle East/ N. Africa, $82- East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 bilion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities, All other figures are projections based on 2006, the last year for which accurate data is available It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionary $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 Federal Law Enforcement, defense- related ONASA, defense-related 800.0 IEnergy Department, defense-related 600.0 OHomeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S, BUSINESS PROFITS 45% 35% 25h 15% 1948 195e 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U,S. COMPENSATION 200% 160% 1 20% 80 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bettom 80 percent: 15% of net worth Next 10 percent 10% of fin. wealth 10 percenti Top 1 percent: 35% of net worth Next 12% of net worth Next 5 percent 11% of fin. wealth Top 1 percent: 43% of fin. wealth Nesst 5 percent: 11% of net worth Next 4 percent: 27% of net vorth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] +450% CEOS' pay +400% S8P 500 Corporate profits +350% Production workers' pay +298.2% +300% Federal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% 26, 16, 06, '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 so, From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% 1Second-lowest 20% Middle 20% Second-highest 20% ITop 20% Actual Estimated Ideal 10% 20% 30% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991~menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki//Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Income in 2003 US$ GINI Ratio Percentage Share of Annual GDR Share (in %), excludng captal *1929 Inflation-adjusted dollars(billions) 1950 1962 : 9961 0261 1974 1978 1982 1986 0661 1994 1998 2002 9007 2010 2014 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995 From 1969 to 2008 essentially all income growth in the United States went to the top 10% of earners. [1] When income grows, who gains? EPI Between 1969 and 2008: TOP 10% Average incomes in the U.S. grew by $11,684 All growth went to the richest 10%. Income for the bottom 90% declined. I Bottom 90% I Top 5-10% Top 1-5% I Top 1% Indicates Decline Average income over time 1969 2008 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2008 Source: The data come from this table: http://www.econ.berkeley.edu/-saez/TabFig2008.xls on Emmanuel Saez's website at University of California, Berkeley. Methodology Again in 2003 dollars, the majority of Americans (light blue line) saw almost no income growth 1967 - 2003. [2] 160000 95th percentile 90th percentile Both percentile 50th percentile 20th percentile 10th percentile 140000 120000 100000 80000 60000 40000 20000 1965 1970 1975 1980 1985 1990 1995 2000 2005 The share of total income for the top 10% of Americans over the last 30 years has spiked sharply. (Krugman) [3] The Long Gilded Age The great divergence 50% The Great Compression 45% 40% 35% 30% Middle classAmerica 25% This growing disparity has led to an inverted pyramid, where a very small percentage of Americans own the majority of assets. [4] The U.S. Wealth-Income Pyramind top 1% (43% of financial assets, 2/3 of all gains in national income) next 4% (29% of financial assets, 40% of national income) top 20% next 15% Sources: next 20% -- the "middle class" U.S. Census Bureau and "Wealth, Income and Power" by G. William Domhoff bottom 60% copyright 2010 charles hugh smith www.oftwominds.com This fact is reflected in the Gini Coefficient, a measure of income inequality, which has been steadily increasing. [5] 0.55 0.53 0.51 0.49 0.47 0.45 0.43 0.41 0.39 0.37 0.35 YEAR (* indicates estimated data) Income inequality compared to other western nations is high and increasing. [6] Figure 1: Gini coefficients for the United States, Canada and the United Kingdom, 1940s through 1990s 45 USA + Canada UK 40 35 30 25 20 The level of inequality is higher than any other western nation, higher even than Russia and comparable to China and Mexico. (2009) [7] O45-49 50-54 O 55-59 >60 O No Data <25 25-29 O 30-34 O 35-39 GINI Coefficient 40-44 Source: CIA - The Borld Factbook 2009 At the same time the income tax rate for the top bracket has fallen from 70-90% to below 40%. [8] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% - 0% 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Effective rates are much lower for all brackets, with the top 400 earners paying only 16.6% as of 2007. [9] 51.2% Effective federal tax rates, 1955-2007 42.4% Top 400 taxpayers Median family 368 29.9% 24.2% 19.5% 17% 16.9% 16.6% 13.6% 13% 10.2% 7.4% 1955 1961 1995 1997 2003 2007 ... and for the top 1% the picture isn't much different. [10] 37 I effective federal tax rate for top 1% of households, by income 36 35 34 33 32 31 29 28 1997 1997 1999 2000 2001 2002 2003 2004 2005 2006 1993 Year Poor economic policies and normal market actions create a cycle of boom and bust... [11] Figure 3: Deviations from Trend in Log GNP 0.04 0.03 0.02 0.01 -0.01 -0,02 -0.03 -0.04 -0,05 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 ... leading to spikes in unemployment. [12] Recession -US Unemployment Rate (SA) 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Mar-70 Mar Meanwhile, the effective corporate tax rate steadily falls, and fewer companies pay any tax at all. [13] Effective US corporate tax rate 65% 55% AAM 45% 35% 25% U.S. Corporate Federal Income Tax Collections as a Percentage Share of GDP, 1946-2009 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Fiscal Year Source: White House Office of Management and Budget, Budget of the United States Fiscal Year 2011, Historical Table 2.1 © Political Calculations 2010 Separately, the US spends more on Defence as a percentage of GDP than any other Western Nation. [14] 1210% 5-10% 4% 13% 12% 11% 1<1% The US is responsible for nearly half of all the worlds military spending. [15] U.S. Military Spending vs. The World in 2008 (in billions of U.S. dollars, with % of total global) Central/ South Asia, $30 (2%) Sub-Saharan Africa, $10 (1%) Latin America, $39 (3%)- Russia, $70 (5%)- Middle East/ N. Africa, $82 East Asial Australasia, $120 (8%) United States, $711 (48%) China, $122 (8%) Europe, $289 (20%) 2008 Total Global Spending = $1.47 Trillion NOTES: Data from International Institute for Strategic Studies, The Miitary Balance 2008, and DOD. The total for the United States is the FY 2009 request and includes $170 billion for military operations in Iraq and Afghanistan, as well as funding for DOE nuclear weapons activities. All other figures are projections based on 2006, the last year for which accurate data is available. It accounts for roughly twenty cents on every dollar of federal spending... [16] U.S. Federal Spending – Fiscal Year 2010 ($ Billion) Net Interest $197 6% Total $3,456 B Medicare & Medicaid Other Mandatory $416 12% $793 23% Discretionar $660 19% Social Security $701 20% Defense Department $689 20% Source Data: CBO Historical Tables ... and it has been steadily growing. Inflation adjusted, it is higher now than at any point during the Cold War. [17] 1,400.0 O Interest on debt, defense-related 1,200.0 O Other defense-related activities 1,000.0 IFederal Law Enforcement, defense- related O NASA, defense-related 800.0 IEnergy Department, defense-related 600.0 O Homeland Security O Veterans Affairs 400.0 OState Department 200.0 O Defense Department 0.0 Back to the economy: the finance sector accounts for an increasing amount of all business profits, with it's employees paid well above the national average. [18] FINANCIAL-INDUSTRY PROFITS AS A SHARE OF U.S. BUSINESS PROFITS 45% 35% 25%% 15% 1948 1958 1968 1978 1988 1998 2007 PAY PER WORKER IN THE FINANCIAL SECTOR AS A PERCENTAGE OF AVERAGE U.S. COMPENSATION 900% 160% 120% 80% 40% 1948 1958 1968 1978 1988 1998 2007 The vast majority of all net worth and financial wealth (such as stocks, equity and real estate) is isolated in 20% of the population. [19] Bottom 80 percent: 7% of fin. wealth Bottom 80 percent: 15% of net worth Next 10 percent: 10% of fin. wealth Next 10 percent: 12% of net worth Тоp 1 рercent: 35% of net worth Next 5 percent 11% of fin. wealth Тop 1 percent: 43% of fin. wealth Next 5 percent: 11% of net worth Next 4 percent: 27% of net worth Next 4 percent: 29% of fin. wealth Net worth Financial wealth distribution, 2007 distribution, 2007 Even in good economic times average workers have seen little to no increase in their pay (in real terms). The CEO of a large organisation earns, on average, 100 times the pay of a regular worker. For CEO's of the S&P 500, it is nearly 300 times as much. [20] CEOS' pay +400% S&P 500 Corporate profits +350% Production workers' pay +298.2% +300% FFederal minimum wage +250% +200% +150% +141.4% +100% +106.7% +50% +4.3% 0% -9.3% -50% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 From 2009 to 2010 median compensation for CEOS of the largest 200 corporations increased by 12%, surpassing pre-recession levels. (no graph available) [21] Americans consistently overestimate their own share of wealth and that of lower quintiles. But underestimate that of higher quintiles. [22] IBottom 20% ISecond-lowest 20% IMiddle 20% Second-highest 20% Тор 20% Actual Estimated Ideal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Wealth Owned Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. The US Ranks: 17th in the Democracy Index. http://en.wikipedia.org/wiki/Democracy_Index 20th in the Education Index. http://en.wikipedia.org/wiki/Education_Index 18th in Math literacy. http://www.nationmaster.com/ 14th in Science Literacy. http://www.nationmaster.com/ 176th in Infant Mortality. https://www.cia.gov/library/publications/the-world-factbook/ 50th in Life Expectancy. https://www.cia.gov/library/publications/the-world-factbook/ 43rd in Education Expenditure. https://www.cia.gov/library/publications/the-world-factbook/ 8th in Firearm related Murders. http://www.nationmaster.com/ 8th in overall Crime Rate. http://www.nationmaster.com/ 1st in Obesity. http://www.nationmaster.com/ 17th in Corruption. http://www.nationmaster.com/ [1] http://www.stateofworkingamerica.org/pages/interactive#/?start=1969&end=2008 [2] http://en.wikipedia.org/wiki/Household_income_in_the_United_States [3] http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/ and http://elsa.berkeley.edu/~saez/saez- UStopincomes-2006prel.pdf [4] http://static1.businessinsider.com/image/4cea93d7ccd1d5402d030000/wealth-pyramid.gif [5] http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA /0,,contentMDK:20238991-menuPK:492138~pagePK:148956-piPK:216618~theSitePK:430367,00.html [6] http://bilbo.economicoutlook.net/blog/wp-content/uploads/2009/08/US_UK_Canada_Gini.jpg [7] http://en.wikipedia.org/wiki/Gini_coefficient [8] http://en.wikipedia.org/wiki/Income_tax_in_the_United_States [9] http://westorlandonews.com/wp-content/uploads/2011/04/tax-graph.jpg [10] http://www.theatlantic.com/daily-dish/archive/2009/07/daily-chart-tax-the-rich-to-pay-for-health-care/198869/ [11] http://en.wikipedia.org/wiki/Business_cycle [12] http://seekingalpha.com/article/196968-has-u-s-unemployment-bottomed [13] http://1.usa.gov/e6GnA4 [14] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [15] http://armscontrolcenter.org/policy/securityspending/articles/fy09_dod_request_global/ [16] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [17] http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries [18] http://www.theatlantic.com/magazine/toc/2009/05/ [19] E. Wolff, New York University (04, 07 and 10) and http://sociology.ucsc.edu [20] 13th Annual CEO Compensation Survey from the Institute for Policy Studies, 2006 [21] http://www.nytimes.com/2011/04/10/business/10comp.html [22] Norton & Ariely, 2010. Perspectives on Psychological Science. Inflation-adjusted dollars(billions) Percentage Share of Annual GDP GINI Ratio 1947 Income in 2003 US$ 1962 1951 Share (in %), excludng capital ga 1963 996L 1970 1974 TII|| 1978 1982 1986 E 066 1994 1998 1995